*US CPI data (1330 GMT) to set tone, may impact Fed rate cut bets
*Bitcoin near two-year high after ETF approval
*Weak wages weigh down yen
SINGAPORE, Jan 11 (Reuters) - The dollar drifted lower in Asia on Thursday as traders waited on U.S. inflation data to
see whether bets on as many as five Fed interest rate cuts this
year were justified, while weak wages data dragged the yen to a
six-week low on the euro.
Bitcoin traded at $46,400, just short of a
two-year high, with investors welcoming the much-anticipated
U.S.approval
of spot bitcoin exchange-traded funds.
The approvalopens the way
for institutional buying and had been
priced in
over recent months, driving the cryptocurrency up 70% since
mid-October.
The Australian and New Zealand dollars
were each about 0.3% higher at $0.6721 and $0.6294,
respectively, with moves capped ahead of the U.S. data at 1330
GMT.
The euro rose 0.1% to $1.0979 and sterling
rose 0.2% to $1.2767.
The dollar index fell 0.1% to 102.23.
The dollar slid through the latter months of 2023 as the
Federal Reserve indicated it was finished with rate hikes and
traders priced in steep cuts.
While that pricing has moderated slightly, and the
dollar recovered, futures still show the market expects
140 basis points (bps) of cuts this year with a two-thirds
chance they will begin as soon as March, leaving prices
sensitive to data surprises.
"In our view investors are still too optimistically
positioned for Fed rate cuts," said Rabobank senior FX
strategist Jane Foley in a note to clients.
"We expect further correction in this outlook and
consequently expect the dollar to see some support on a
1-to-3-month view," she said, with the euro to fall as far as
$1.05 on a three-month view as Germany's economy falters.
U.S. core inflation is seen at 0.3% for the
month and 3.8% year-on-year for December, its slowest since
early 2021.
A 0.3% reading, Deutsche Bank's Alan Ruskin points out,
would "suggest some stalling out in the downward improvements"
and decrease the urgency of cutting interest rates.
After gaining sharply on Wednesday the dollar fell 0.3%
to 145.39 yen, though the Japanese currency struck a
six-week trough of 159.99 per euro in early trade.
Data on Wednesday showed Japanese workers' real wages
shrank for a 20th straight month in November - confounding
officials' wishes to see wage gains before tightening policy.
The softer dollar helped China's yuan off a
one-month trough to 7.1621 per dollar.South Korea's central bank kept its policy rate unchanged for an eighth consecutive meeting, as expected, leaving the won
marginally stronger at 1,315.8 per dollar.
========================================================Currency bid prices at 0500 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.0972 +0.05% -0.55% +1.0985
$1.0978 +1.0970
Dollar/Yen 145.7250 -0.25% +0.00% +145.8000
145.3800 +145.3300
Euro/Yen 159.93 -0.21% +0.00% +160.0000
159.60 +159.5200
Dollar/Swiss 0.8509 -0.15% +0.00% +0.8507
0.8495 +0.8492
Sterling/Dollar 1.2742 +0.20% +0.33% +1.2770
1.2764 +1.2741
Dollar/Canadian 1.3380 -0.11% +0.00% +1.3380
1.3364 +1.3358
Aussie/Dollar 0.6700 +0.29% -1.44% +0.6725
0.6719 +0.6698
NZ Dollar/Dollar 0.6227 +0.39% -1.08% +0.6252
0.6248 +0.6225
All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ